For information on how to order the World Bank publications reviewed in this issue, see the order form.
The book assesses alternative empirical measures of the internal and external real exchange rates. It surveys the literature on estimating equilibrium exchange rates in both industrial and developing countries. It presents the currently available methodologies for empirically estimating the equilibrium exchange rate in developing countries, analyzing four of them in detail.
The workshop identified six trends that will define the institutional and policy matrix of sustainable development in the 21st century: a tendency toward globalization, continuing environmental change, demographic transition in developing countries, greater political participation and community involvement, increasing decentralization and the emergence of smaller economic clusters within (but also autonomous from) the nation state, and sweeping urbanization in the developing world.
For information on obtaining copies of this book, contact the German Foundation for International Development, Development Policy Forum, Villa Borsig, Reiherwerder, D-13505 Berlin, Germany. Quantities limited.
Working Papers disseminate the findings of work in progress and encourage the exchange of ideas among Bank staff and all others interested in development issues.Working Papers can be downloaded from the Website http://www.worldbank.org/research/workingpapers or requested from the contact person indicated at the Bank's main address.
Social Exclusion and Land Administration in Orissa, India
Robin Mearns and Saurabh Sinha
WPS 2124 * Contact Geraldine Burnett, room MC10-156, fax 202-458-2111.Developing Country Agriculture and the New Trade Agenda
Bernard Hoekman and Kym Anderson
WPS 2125 * Contact Lili Tabada, room MC3-333, fax 202-522-1159.Liberté, Egalité, Fraternité: Exploring the Role of Governance in Fertility Decline
Monica Das Gupta
WPS 2126 * Contact Monica Das Gupta, room MC3-579, fax 202-522-1153.Lifeboat Ethic versus Corporate Ethic: Social and Demographic Implications of Stem and Joint Families
Monica Das Gupta
WPS 2127 * Contact Monica Das Gupta, room MC3-579, fax 202-522-1153.Learning Outcomes and School Cost-Effectiveness in Mexico: The PARE Program
Gladys Lopez Acevedo
WPS 2128 * Contact Michael Geller, room I4-142, fax 202-522-2093.Agricultural Extension: Generic Challenges and Some Ingredients for Solutions
Gershon Feder, Anthony Willett, and Willem Zijp
WPS 2129 * Contact Pauline Kokila, room MC3-544, fax 202-522-1153.Deep Integration, Nondiscrimination, and Euro-Mediterranean Free Trade
Bernard Hoekman and Denise Eby Konan
WPS 2130 * Contact Lili Tabada, room MC3-333, fax 202-522-1159.Efficiency Wage and Union Effects in Labor Demand and Wage Structure in Mexico: An Application of Quantile Analysis
William F. Maloney and Eduardo Pontual Ribeiro
WPS 2131 * Contact Tania Gomez, room I8-102, fax 202-522-2119.A Regime-Switching Approach to Studying Speculative Attacks: A Focus on European Monetary System Crises
Maria Soledad Martinez Peria
WPS 2132 * Contact Agnes Yaptenco, room MC3-446, fax 202-522-1155.Resolution of Corporate Distress: Evidence from East Asia's Financial Crisis
Stijn Claessens, Simeon Djankov, and Leora Klapper
WPS 2133 * Contact Rose Vo, room MC9-624, fax 202-522-2031.Interlinkage, Limited Liability, and Strategic Interaction
Kaushik Basu, Clive Bell, and Pinaki Bose
WPS 2134 * Contact Michelle Mason, room MC4-338, fax 202-522-1158.Hungary's Integration into European Union Markets: Production and Trade Restructuring
Bartlomiej Kaminski
WPS 2135 * Contact Lili Tabada, room MC3-333, fax 202-522-1159.An Empirical Analysis of Competition, Privatization, and Regulation in Telecommunications Markets in Africa and Latin America
Scott J. Wallsten
WPS 2136 * Contact Paulina Sintim-Aboagye, room MC3-422, fax 202-522-1155.Globalization and National Development at the End of the 20th Century: Tensions and Challenges
Andrés Solimano
WPS 2137 * Contact Diana Cortijo, room I4-050, fax 202-676-0720.Multilateral Disciplines for Investment-Related Policies
Bernard Hoekman and Kamal Saggi
WPS 2138 * Contact Lili Tabada, room MC3-333, fax 202-522-1159.Small States, Small Problems?
William Easterly and Aart Kraay
WPS 2139 * Contact Karie Labrie, room MC3-456, fax 202-522-1155.Gender Bias in China, the Republic of Korea, and India, 1920-90: Effects of War, Famine, and Fertility Decline
Monica Das Gupta and Li Shuzhuo
WPS 2140 * Contact Monica Das Gupta, room MC3-579, fax 202-522-1153.Capital Flows, Macroeconomic Management, and the Financial System: Turkey, 1989-97
Oya Celasun, Cevdet Denizer, and Dong He
WPS 2141 * Contact Liana Nathaniel, room F3P-198, fax 202-974-4396.Adjusting to Trade Policy Reform Steven J. Matusz and David Tarr
WPS 2142 * Contact Lili Tabada, room MC3-333, fax 202-522-1159.Bank-Based and Market-Based Financial Systems: Cross-Country Comparisons
Asl1 Demirgüç-Kunt and Ross Levine
WPS 2143 * Contact Karie Labrie, room MC3-456, fax 202-522-1155.Aid Dependence Reconsidered
Jean-Paul Azam, Shantayanan Devarajan, and Stephen A. O'Connell
WPS 2144 * Contact Hedy Sladovich, room MC2-609, fax 202-522-1154.Assessing the Impact of Micro-Credit on Poverty and Vulnerability in Bangladesh
Hassan Zaman
WPS 2145 * Contact Bezawork Mekuria, room MC4-328, fax 202-522-1158.A New Database on Financial Development and Structure
Thorsten Beck, Asl1 Demirgüç-Kunt, and Ross Levine
WPS 2146 * Contact Karie Labrie, room MC3-456, fax 202-522-1155.Developing Country Goals and Strategies for the Millennium Round
Constantine Michalopoulos
WPS 2147 * Contact Lili Tabada, room MC3-333, fax 202-522-1159.Social Capital, Household Welfare, and Poverty in Indonesia
Christiaan Grootaert
WPS 2148 * Contact Gracie Ochieng, room MC5-410, fax 202-522-3247.Income Gains to the Poor from Workfare: Estimates for Argentina's Trabajar Program
Jyotsna Jalan and Martin Ravallion
WPS 2149 * Contact Patricia Sader, room MC3-556, fax 202-522-1153.Who Wants to Redistribute? Russia's Tunnel Effect in the 1990s
Martin Ravallion and Michael Lokshin
WPS 2150 * Contact Patricia Sader, room MC3-556, fax 202-522-1153.A Few Things Transport Regulators Should Know about Risk and the Cost of Capital
Ian Alexander, Antonio Estache,and Adele Oliveri
WPS 2151 * Contact Gabriela Chenet-Smith, room G2-148, fax 202-334-8350.Comparing the Performance of Public and Private Water Companies in the Asia and Pacific Region: What a Stochastic Costs Frontier Shows
Antonio Estache and Martin A. Rossi
WPS 2152 * Contact Gabriela Chenet-Smith, room G2-148, fax 202-334-8350.The Mystery of the Vanishing Benefits: Speedy Analyst's Introduction to Evaluation
Martin Ravallion
WPS 2153 * Contact Patricia Sader, room MC3-556, fax 202-522-1153.Inter-Industry Labor Mobility in Taiwan, China
Howard Pack and Christina Paxson
WPS 2154 * Contact Hedy Sladovich, room MC2-609, fax 202-522-1154.Lending Booms, Reserves, and the Sustainability of Short-Term Debt: Inferences from the Pricing of Syndicated Bank Loans
Barry Eichengreen and Ashoka Mody
WPS 2155 * Contact Sydnella Kpundeh, room MC6-767, fax 202-522-2578.How Has Regionalism in the 1990s Affected Trade?
Isidro Soloaga and L. Alan Winters
WPS 2156 * Contact Lili Tabada, room MC3-333, fax 202-522-1159.How Regional Blocs Affect Excluded Countries: The Price Effects of MERCOSUR
Won Chang and L. Alan Winters
WPS 2157 * Contact Lili Tabada, room MC3-333, fax 202-522-1159.The Effect of Foreign Entry on Argentina's Domestic Banking Sector
George R. G. Clarke, Robert Cull, Laura D'Amato, and Andrea Molinari
WPS 2158 * Contact Paulina Sintim-Aboagye, room MC3-422, fax 202-522-1155.Provincial Bank Privatization in Argentina: The Why, How, and "So What?"
George R. G. Clarke and Robert Cull
WPS 2159 * Contact Paulina Sintim-Aboagye, room MC3-422, fax 202-522-1155.Protecting the Poor from Macroeconomic Shocks
Francisco Ferreira, Giovanna Prennushi, and Martin Ravallion
WPS 2160 * Contact PREM Advisory Services, room MC4-501, fax 202-522-1135.Will the Real "Natural Trading Partner" Please Stand Up?
Maurice Schiff
WPS 2161 * Contact Maria Kasilag, room MC3-321, fax 202-522-1159.Quantifying the Fiscal Effects of Trade Reform
Shantayanan Devarajan, Delfin S. Go, and Hongyi Li
WPS 2162 * Contact Hedy Sladovich, room MC2-609, fax 202-522-1154.Coverage under Old-Age Security Programs and Protection for the Uninsured—What Are the Issues?
Estelle James
WPS 2163 * Contact Marianne Leenaerts, room G2-030, fax 202-676-0961.Challenging El Salvador's Rural Health Care Strategy
Maureen Lewis, Gunnar S. Eskeland, and Ximena Traa-Valerezo
WPS 2164 * Contact Maureen Lewis, room H7-221, fax 202-522-3665.The Russian City in Transition: The First Six Years in 10 Volga Capitals
Martha de Melo and Gur Ofer
WPS 2165 * Contact Hedy Sladovich, room MC2-609, fax 202-522-1154.Seeking Votes: The Political Economy of Expenditures by the Peruvian Social Fund (FONCODES), 1991-95
Norbert R. Schady
WPS 2166 * Contact Norbert Schady, room MC4-629, fax 202-522-3283.Bonds and Bridges: Social Capital and Poverty
Deepa Narayan
WPS 2167 * Contact Ben Jones, room MC3-782, fax 202-522-3283.Wage and Productivity Gaps: Evidence from Ghana
Dorte Verner
WPS 2168 * Contact Hazel Vargas, room I8-138, fax 202-522-2119.Corruption, Public Finances, and the Unofficial Economy
Simon Johnson, Daniel Kaufmann, and Pablo Zoido-Lobatón
WPS 2169 * Contact Diane Bouvet, room G2-136, fax 202-334-8350.The Distributional Consequences of Monetary Policy: Evidence from Malaysia
Ilker Domaç
WPS 2170 * Contact Armanda Carcani, room O4-015, fax 202-522-2751.Productivity Growth and Convergence in Agriculture and Manufacturing
Will Martin and Devashish Mitra
WPS 2171 * Contact Lili Tabada, room MC3-333, fax 202-522-1159.The East Asian Crisis: Investigating Causes and Policy Responses
Warwick McKibbin and Will Martin
WPS 2172 * Contact Lili Tabada, room MC3-333, fax 202-522-1159.
But household income data are now available for more than 90 percent of the world's population. The number of household surveys has increased, particularly in Africa, and political changes in China and the former Soviet Union have allowed compilation and release of survey data. A recent Bank study has taken advantage of the expanded pool of survey data, deriving and comparing world income distribution in 1988 and 1993.
The 1988 survey data cover 101 countries representing about 4.6 billion people, or almost 87 percent of the world's population. The 1993 surveys cover 119 countries—more than 90 percent of the population and about 95 percent of world GDP. As these shares suggest, the 61 countries not in the study are very small.
The increased coverage in Africa accounts for most of the difference in the number of countries between 1988 and 1993. In 1988 comparable household data were available for only 14 African countries. By 1993 a survey program launched by the World Bank in cooperation with African governments had raised the number of countries to 29—representing nearly three-quarters of Africa's population and almost 90 percent of regional GDP.
Most of the data used in the study come from four sources:
The study's findings show that world inequality is very high. In 1993 the richest 1 percent of the world's people received as much income as the poorest 59 percent. What explains this inequality? By far the biggest factor is a person's country: about 75-80 percent of world inequality is due to the differences in average income between countries. Only 20-25 percent is due to class-that is, income inequality within countries.
Even more disturbing is the finding that inequality is increasing. Between 1988 and 1993 the real income of the richest 5 percent of the world's people increased by 12 percent, while that of the poorest 5 percent fell by almost 25 percent. So the world is becoming increasingly segregated between rich and poor nations. Economic growth in poor and populous countries is crucial not only to alleviate poverty but also to reduce world inequality.
Two cautions about the results here: First, because countries often collect either income or expenditure data, the calculations are based on a mix of the two. Since poor countries tend to collect expenditure data, and since expenditure measures tend to be higher than income measures, the results here probably understate world inequality. Second, the results refer to income or expenditure flows and do not account for stocks of assets. Ignoring wealth also would be expected to underestimate inequality.
For more information about the research and the data sources used, contact Branko Milanovic at the World Bank's main address or at bmilanovic@worldbank.org. The findings of the research are reported in a paper by Milanovic, "True World Income Distribution, 1988 and 1993" (Policy Research Working Paper 2244). For copies, contact Patricia Sader at the Bank's main address or at psader@worldbank.org.
The results of one application of this technique, which is called quasi-exact polynomial interpolation, are illustrated in figure 1, below. The curves above the horizontal axis show the distribution of population by income level, while the curves below the axis show their income. The area between the horizontal axis and each outer curve equals one, distributed so that the areas within the curves correspond to shares in total population or income. The thicker lines show the overall distribution of population and income, and the lighter lines the distribution in three sets of countries: Latin America, the OECD countries, and China plus India ("Asia").
Nearly all "Asians" earn less than $6,000, while nearly all OECD citizens earn more than that. Latin America has the greatest inequality of the three, with some of its people receiving the lowest income and others the highest. The lower half of figure 1 shows that most of the income in the world goes to people earning more than $10,000, almost all of whom are in OECD countries.
Another use of the technique is to simulate the effects of changes in policies or conditions. Income distribution could be decomposed graphically and analytically by such factors as salary, transfers, and capital income to show the effects of changes in tax and poverty alleviation policies, for example.
Because each curve in figure 1 is based on aggregate data—for 10 decile groups—the curves might be expected to be relatively discontinuous, reflecting the "bar chart" type of initial distributions from which they were derived. The new technique, however, smooths curves from these discontinuous data through precise interpolation; it also allows restoration of exact values at the interval boundaries and minimizes deviation in between (hence the "quasi-exact"). The program is implemented in GINI ToolPak, which runs in Microsoft Excel.
For more information on the technique or for copies of the GINI ToolPak software, contact Yuri Dikhanov at the Bank's main address or at ydikhanov@worldbank.org.